June 24, 2021 - Written by John Cameron
STORY LINK Euro to US Dollar (EUR/USD) Exchange Rate Steady as German Business Confidence Grows in June
EUR/USD Exchange Rate Rangebound Despite Robust German Business Morale
The Euro US Dollar exchange rate held steady this morning following the release of the latest German business climate report for June which rose above forecasts from 99.2 to 101.8. The pairing is currently trading around $1.19.
The Euro (EUR) has benefited from rising French and German business confidence as two of the Eurozone’s largest economies shake off the Covid-19 crisis.
Carolynn Look, an analyst at Bloomberg, commented on the latest German business confidence data:
‘Europe’s two largest economies are on track for a strong upswing after contractions in the first quarter. Consumers are starting to visit restaurants and shops again after months of stringent lockdown, coronavirus infections have dropped, and half the population in each country now has at least one vaccination.’
Ifo president Clemens Fuest was also optimistic, saying:
‘In trade, the easing of restrictions improved the business climate greatly. This was due to a marked improvement in current business. Expectations also turned more optimistic.
Sentiment rose particularly steeply in retail. Never has the indicator for the current situation seen such a steep rise.’
Euro traders will be looking ahead to today’s speech from Fabio Panetta, a member of the European Central Bank’s (ECB) executive board.
Any upbeat comments about the outlook for the Eurozone’s economy could see the EUR/USD exchange rate rise.
US Dollar (USD) Exchange Rate Steady Despite Strong US PMI Data
The US Dollar (USD) is rangebound against the single currency today following the publication of the latest Markit PMIs. While the manufacturing data beat forecasts, the serves PMI fell below forecasts, but the outlook for the US economy remains strong.
Today will see the release of the latest US durable goods orders for May. With the figure expected to rise by 2.7%, we could see the US Dollar begin to edge higher on growing optimism in the American economy.
Later on today the US initial jobless claims report is expected to fall, buoying confidence in the US labour sector, which took a severe hit from the Covid-19 pandemic.
Federal Reserve Chairman Jerome Powell, in a series of dovish comments suggested the US was ‘very far from maximum employment’.
However, with large economies like the Eurozone and China recovering from the coronavirus pandemic, demand for the safe-haven ‘Greenback’ appears to be slipping.
EUR/USD Exchange Rate Forecast: UK and US Consumer Confidence Data in Focus
Pound (GBP) investors will monitor tomorrow’s release of the latest GfK consumer confidence data for June.
Any signs of improvement in consumer morale would bode well for the UK economy and boost the GBP/USD exchange rate.
US Dollar (USD) traders will monitor tomorrow’s release of the US Michigan consumer sentiment index for June.
If the outlook for the US economy continues to improve, then we could see risk sentiment improve, limiting demand for the safe-haven US Dollar.
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